CMS Paid $112M for Potentially Harmful Drugs, OIG Says

Cheryl Clark, November 5, 2010

The Office of Inspector General is investigating the Centers for Medicare & Medicaid Services for paying $112 million in 2006 and 2007 for thousands of drugs. An audit of CMS revealed that the drugs were terminated or expired under Medicare Part D.

"Terminated drugs are discontinued drugs that have passed their shelf life or drugs that have been pulled from the market for health or safety reasons," the OIG said in its report.

"Such medications could be weak, ineffective, or detrimental to beneficiaries' health. However, federal regulations do not specifically prohibit coverage of terminated drugs under the Medicare Part D program," the OIG report said.

The $112 million in gross drug costs was linked to the purchase of 2,967 types of terminated drugs. Additionally, the OIG report said, federal regulations in the Medicare Prescription Drug Benefit Manual, "states that a pharmacy's act of dispensing expired drugs constitutes fraud, waste, or abuse."

The report recommends that CMS issue regulations to prohibit Medicare Part D from covering drugs that have been terminated, and in the interim, to publish a list of these drugs on its website.

But CMS does not agree. In a letter sent to Inspector General Daniel Levinson, CMS's then-acting administrator Marilyn Tavenner said, "we strongly agree that we do not want Medicare beneficiaries receiving expired or outdated drugs," and added, "we rarely see evidence to indicate that pharmacies are dispensing outdated drugs to Medicare beneficiaries."

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